How should I take my first step into investing?

henry114

If I could budget myself to allow for a £100 investment each month would the Vanguard option look like a better choice for a novice investor than the AJ Bell passive funds which is the other option I am focusing on?

ColdIron

Hargreaves Lansdown allow £25 contributions with their Monthly Savings Plan. They can be one of the more expensive platforms for funds at 0.45% pa but at a low level such as this you're looking at a difference of a cheap cup of coffee every year in charges. Another way to do it is to save up until you have £100 or whatever and contribute every few months

Audaxer

henry114 wrote: »

If I could budget myself to allow for a £100 investment each month would the Vanguard option look like a better choice for a novice investor than the AJ Bell passive funds which is the other option I am focusing on?

I previously looked at the A J Bell passive funds and didn't like the fact that they consist of mostly ETFs, which are different from index funds, but the site didn't explain that. For a novice investor starting out, a low cost global diversified multi-asset fund like for example, Vanguard LifeStrategy or HSBC Global Strategy, would in my opinion be a better option.

ewaste

I'm not quite sure how Hargreaves Lansdown does things, I would imagine a minimum purchase or investment value still applies to funds therefore do the monthly direct debits build until they reach the minimum for whatever fund? I would imagine other providers also do something similar.

ColdIron

HL's Monthly Savings allow £25 purchases of individual funds, no need to save up. Other platforms do something similar but most have higher minimums

ewaste

ColdIron wrote: »

HL's Monthly Savings allow £25 purchases of individual funds, no need to save up. Other platforms do something similar but most have higher minimums

Therefore paying £25 by Direct Debit could be trickled into, for example, Vanguard Lifestrategy despite the minimum investment normally being £100?

ColdIron

ewaste wrote: »

Therefore paying £25 by Direct Debit could be trickled into, for example, Vanguard Lifestrategy despite the minimum investment normally being £100?

Most certainly, the £100 minimum does not apply to monthly savings. It's worth mentioning that their DD is directly linked to the purchase of a fund, other providers decouple the DD and purchase. You can pay cash into you account via DD as well if you wanted but there isn't much point as the minimum purchase would be £100 just as if you'd paid in with a debit card

Eco_Miser

henry114 wrote: »

I also hold a Help to buy ISA would this impact my options at all?

You are allowed to subscribe £20000 per year in total to all ISAs, so your subscription to a HTB ISA would reduce the theoretical amount you could put in your S&S ISA, but with figures you mention, there's no practical effect.

henry114 wrote: »

I am looking to start investing some money but need some advice. I am completely new to investing but would be able to open something with a small lump sum of around £1000 and then small regular investments (£25-£50) per month. What would be the most suitable route to take? I have been looking at the AJ Bell stocks and shares ISA and using their passive fund.

There's a list of brokers/platforms on Monevator*. There's lots more useful stuff on that site.
At your level of investment you should go for a percentage based fee.

An alternative to buying a small amount each month would be to save in a regular saver bank account, and buy funds once a year with the proceeds.

*Note that Interactive Investor has bought TDDirect, and both will shortly have the same new fee structure.

TheShape

I know that discussion on this thread has moved away from a LISA but unless there is a very good reason not to use one, shouldn't the OP be seriously considering maximising the LISA allowance if they intend to purchase a property? Use it or lose it!

Alexland

Although I am a big LISA fan the main downside of transfering a HTB ISA into a LISA is the low interest rate from Skipton and the 12 month holding period before it can be used.

This isn't a problem if the OP intends to buy a property in the next 1-3 years but for people planning to buy in the next 4-7 years they end up in LISA nowhere-land where the timescales are so long that the poor interest errodes the additional bonus but too short to invest in shares/bonds with a high probability of an inflation beating return.

In terms of the other investment assuming the money won't be needed for 7+ years, and that you would not significantly benefit from making extra pension contributions (employer matching, 40% tax rate, salary sacrifice NI savings or if your pension will be so small you can withdraw tax free) then I would push yourself to £100 as the Vanguard platform and VLS60 (or 40 for less volatility or 80 if adventurous) is a better product than going with AJ Bell passive or HL platform.